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Cash-raising by $22bn unlisted funds sector revives

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Fundraising in the $22bn market for unlisted agriculture funds has picked up after a slow start to 2016, mirroring the recovery in grain prices.

Up to September this year, five agricultural and farmland focused funds had raised approximately $0.6bn in aggregate capital, according to Preqin, a database for the alternative investments industry.

However, since then, a further three funds have come up, bringing the total number of funds to eight, which have raised a combined $2.1bn.

This "places the industry on track to approach the strong fundraising levels seen through recent years if the current pace of activity is sustained through the fourth quarter," Tom Carr, Preqin's head of natural resources products, told

'Pipeline remains strong'

Mr Carr flagged the potential for further cash commitments, saying that 53 funds were currently holding roadshows, seeing $13bn of capital.

"The fundraising pipeline remains strong," he said, adding that the extent of fund activity shows "that fund managers remain confident of securing investor capital and are seeing the opportunities that agriculture investments offer".

Sector fund-raising actually peaked in 2014, at $4.0bn raised by 17 funds, easing a little to $3.9bn last year, taken by 10 funds.

'Difficulty attracting capital'

The improvement in fund-raising performance - which co-incides with a recovery in prices of grains from multi-year lows, while coffee and sugar prices have set multi-year highs - follows a tricky start to 2016.

Preqin previously, in a report analysing data up to late July, said that "fundraising has slowed in 2016 so far, with five funds raising approximately $600m in aggregate capital.

The group noted that "as the sector is still relatively new and growing, fund managers are having difficulty attracting institutional capital.

"Agriculture or farmland focused funds have typically closed below their initial fundraising target in recent years, with the average fund closed in 2012 securing 77% of its target, rising to 98% in 2015."

However, the briefing identified that "some funds have been oversubscribed and closed significantly above target".

One such fund was TIAA Asset Management, which raised $3bn for TIAA-CREF Global Agriculture II in July 2015, exceeding its initial $2.5bn target.

'Concentrated in developed markets'

A substantial proportion of agriculture and farmland investment is directed towards North America.

Among the 77 agriculture or farmland-focused funds closed since 2011, 25 funds with a primary focus on North America have raised $5.7bn, or 35% of total capital raised, Preqin said.

Outside North America, the largest sums of capital have been raised by funds with a primary focus on Asia, at $1.8bn and Australasia, at $1.2bn.

Fund managers running agriculture and farmland-focused funds tend to be concentrated in the developed markets of North America (38% of all managers) and Europe (26% of all managers), though many funds have a broader geographical remit, said Preqin.

By Tanya Ashreena

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